Many individuals may find themselves in a difficult financial situation where they are unable to pay their back taxes in full. When faced with this challenge, many people wonder what happens when they reach out to the Internal Revenue Service (IRS) and attempt to settle with them. This article aims to explain the potential consequences of not paying back taxes in full and the steps the IRS may take in response.

Initial Communication with the IRS

Often, the first step the IRS will take when contacted by an individual who is behind on their taxes is to send a bill in the mail. The primary purpose of this initial communication is to inform the taxpayer about their outstanding balance and to encourage them to establish a payment plan. In the absence of prior arrangements, the taxpayer may begin to incur late fees and interest charges on the unpaid balance.

Prior Arrangements and Congressional Involvement

It is important to note that settling with the IRS is not a simple process of making contact and receiving a reduced payment. The IRS does not operate under the assumption that any contact or attempted settlement means a reduction in the owed amount. Rather, negotiations for reduced payments typically involve a formal process. Failing to make prior arrangements can lead to increased penalties and interest, as the IRS starts to accumulate these charges on the unpaid balance.

Legal Ramifications of Not Paying Back Taxes

The legal implications of non-payment of taxes are significant and can potentially result in severe consequences. Historically, tax evasion has been considered a felony under U.S. law. However, recent legal developments have shifted the landscape somewhat. After Hunter's charges were changed from felonies to misdemeanors, the legal status of tax evasion has become less clear. The next person to be arrested by the IRS for tax avoidance would likely view this as an opportunity, rather than a deterrent.

Potential Legal Actions by the IRS

Depending on the severity of the credit and the taxpayer's response to the initial communication, the IRS may initiate further action. These actions can include:

Wage or bank account levies: The IRS may garnish wages or withdraw money from bank accounts to cover the outstanding tax debt.

Tax liens: The IRS may place a lien on your property, making it difficult to sell or refinance without paying the tax debt first.

Property seizures and sales: In extreme cases, the IRS may seize property to cover the tax debt, including real estate and other assets.

Conclusion

Reaching out to the IRS and attempting to settle a tax debt is a complex process. It is crucial to understand the potential consequences and to explore all available options before making any decisions. Consulting with a tax professional can provide valuable guidance and may help to mitigate the risks associated with non-payment of back taxes.